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Area based initiatives toolkit: Neighbourhood saturation programmes

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What are they and what do they aim to do?

Neighbourhood saturation is a policy model that involves programmes supporting large numbers of residents in a local area. By providing intense support focussed on one area, saturation aims to achieve greater impact by creating a ‘critical mass’ of successful residents to teach, inspire, or otherwise influence others in the community. By encouraging positive spillovers between residents, saturation aims for transformational change of deprived neighbourhoods. To strengthen these spillover effects, saturation policies typically also involve ‘community support for work’ (i.e. community building and strengthening peer relationships) in addition to more direct support.

Although neighbourhood saturation programmes can target all residents and many different outcomes, this toolkit focusses on programmes that aim to improve employment outcomes by targeting all out of work residents in a community. Employment support saturation programmes often feature a combination of financial incentives for job-seekers or employers, childcare interventions, job training, neighbourhood support for finding work, and mentorship, in addition to the community measures mentioned above.

Things to consider

  • Is saturation a cost-effective approach for increasing local employment or earnings? The four studies found little measurable impact on overall employment or earnings, although findings are more positive for specific groups within target areas. That said, costs usually exceed benefits for specific groups where measurable impacts are positive. Evidence from the New Deal for Communities (NDC) suggests that programmes aimed at social welfare do no better on employment or earnings. Taken together, these findings cast some doubt on the cost-effectiveness of supporting all unemployed residents, as opposed to more targeted programmes within areas.
  • How can area-level gains be increased? Some evidence suggests that low levels of residential mobility are associated with larger area-level improvements. That is, individual benefits translate into area level benefits, provided those individuals don’t move out.
  • Are there area characteristics that change effectiveness? Saturation may work best for individuals that belong to highly concentrated minority ethnic groups (and within these communities women may fare much better than men). This may reflect greater spillovers within tight-knit communities and suggests that saturation may be more effective when combined with community building measures.
  • Are there individual characteristics that change effectiveness? One UK study finds that financial incentives and careers advice are more effective for individuals with high subjective employability (e.g. motivation) but low objective employability (e.g. qualifications).
  • What are the potential wider impacts of neighbourhood saturation programmes? There may be wider ‘non-economic’ benefits to saturation programmes, even if programmes focus on outcomes such as resident employment and earnings. For NDC, a multi-objective programme, evaluation evidence shows mixed results on outcomes such as crime, health, satisfaction with housing and neighbourhood satisfaction. Overall, however, the evidence does not provide sufficient information to allow us to reach strong conclusions on the additional benefits of neighbourhood saturation programmes that target economic outcomes.

How effective are they?

Evidence on employment effects is mixed: some groups in a community may benefit more than others. Only one of four studies finds positive effects on overall employment outcomes. However, two of the three studies that do not find positive effects overall, do find them for certain groups:

  • For one US programme, positive effects were found for the largest ethnic groups on each site (often comprising a very high percentage of neighbourhood residents); furthermore, within these communities there were significant differences in outcomes by gender.
  • For one UK programme (Employment Zones) there were positive effects for individuals rated as less employable on objective measures (e.g. skills, experience) and/or on subjective measures (e.g. attitudes, motivation) but negative effects for individuals rated highly on both of these measures. The study also reports positive effects for 30-49 year-olds (the oldest in the study), but no effect for other age groups.

Evidence for positive earnings effects is slightly stronger than for employment, and these also vary across groups. Two of three studies (both on the same US programme) find positive earnings effects overall. As with employment, earnings effects vary across groups, with larger effects for those not receiving government benefits or with poor employment history, long-term or younger residents and for the largest ethnic groups on each site. A third UK study (StepUP) finds no measurable impact on earnings, either overall or for specific groups. Indeed, for some groups days worked increased with no effect on earnings, suggesting that wages fell for those groups. The most employable individuals even saw earnings fall.

Evidence on New Deals for Communities programme

New Deal for Communities (NDC) was a ‘social welfare’ saturation programme implemented in the UK. Social welfare saturation differs from employment programmes because they aim to improve a broad range of additional outcomes such as crime, housing quality, and health. Local NDC programmes were significantly steered by residents, who helped come up with with particular initiatives. Initiatives on ‘worklessness’ differed by area, but frequently targeted large numbers of residents in a neighbourhood and were motivated by the idea that spillovers should enhance programme effects.

We found six NDC studies overall. Of the five that evaluate employment outcomes, only one study finds a small positive effect (those supported are 1.01 times more likely to exit unemployment), two find mixed effects, and two find no effect. Three of these studies also examine income, finding no effect. Three studies look at the effect on further training, with one finding a positive effect, one finding no effect overall but a positive effect for highly educated individuals, and one finding no effect.

Four studies examine the effect on different welfare outcomes: findings are mixed. NDC may have lead to improved perceptions of crime (two out of three studies) and number of crimes experienced (one study finds a decrease, another no effect). NDC has no positive effects on the adoption of healthy habits (e.g. exercise, eating fruit and veg, not smoking), self-reported health or perceived quality of local health services. It has a positive impact on neighbourhood satisfaction, but no impact on satisfaction with housing.

Is saturation for employment cost effective?

The findings reported in the studies suggest that saturation policies may not be cost effective on either overall employment or earnings measures, and may be high cost for sub-groups where we see positive impacts. There may also be wider benefits to saturation programmes that have broader objectives, but the studies do not allow us to reach strong conclusions on those additional benefits or programme cost-effectiveness in achieving them.

For the US Jobs-Plus scheme, a reported cost of £500 per household per year is combined with estimates of effects on earnings to produce a cost-effectiveness figure: Jobs-Plus increases earnings by 80p for every pound spent on the programme. This is not cost effective, and is likely to be an upper bound since the cost figure ignores financial incentives which were provided as part of the evaluated programme.

For the UK StepUP scheme, the study reports a programme cost of £9,300 per participant per year. For many groups the programme had no effect on employment so was not cost-effective. Even for those groups where effects were positive, the costs per extra working day were high (£218 for 30-49 year olds, £142 for a low employability group), especially given that the average participant earned only £53.36 per day. Further, there were no positive earnings effects, suggesting that additional working days came at the cost of lower wages, so the programme was not cost effective on this measure for any group.

Area based initiatives toolkit: Neighbourhood saturation programmes